National Association of Home Builders Discusses Economics and Housing Policy

Homeownership Rate Holds Steady during Second Quarter

The Census Bureau reported the seasonally adjusted homeownership rate remained unchanged at 65.6 percent during the second quarter of 2012, hovering at a 15-year low for the 2nd consecutive quarter. The performance across household head age groups was mixed as the under 35 and 55-64 cohorts saw homeownership rates decline compared to the first quarter of 2012. By contrast, homeownership rates improved for the three remaining age groups, with the largest gain observed for householders between the ages of 35 and 44.

Aside from the householders aged 65 years and over, homeownership rates among the other age groups remain appreciably lower in comparison to the same period a year ago and significantly lower than their peak levels observed in the mid-2000s. The largest decline overall has been observed in the 35-44 age group, where the homeownership rate has tumbled nearly 9 percentage points.

The ongoing large decline in homeownership among younger cohorts is worrisome; however, since the 45-54 and 55-64 age groups account for nearly half of all owner-occupied households combined, fluctuations in homeownership among these two age groups will likely have more visibly significant impacts on overall homeownership rates. Fortunately, as economic conditions continue to improve and members of these two older age groups begin to form new households (or re-constitute former as they move out of combined living arrangements), they should tend towards buying rather than renting.

In addition to the homeownership rate, this report also examines trends in the vacant housing stock. The rental vacancy rate declined for the third consecutive quarter, falling to 8.6%–the lowest reading in a decade. Other sources, such as NAHB’s own Multifamily Vacancy Index, reveal a similar downward trend in apartment vacancies. The homeowner vacancy rate has fallen steadily in each of the last six quarters, declining to a reading of 2.1%.

[…] Nationwide, the homeownership rate was unchanged for the second quarter of 2012, coming in again at 65.6% on seasonally adjusted basis, according to the Census Bureau. While this level remains near a 15-year low, declines in the rate itself may be coming to an end as a housing recovery takes hold in a greater number of locations. […]